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forex
The Norwegian Kroner as a safe haven?
Post the Swiss National Bank pegging the CHF to the EUR, with a minimum exchange rate of CHF1.20, forex traders have been scurrying to find a new safe haven, and some have been turning to the Norwegian Kroner (NOK). Norway has a strong fiscal position with a positive account surplus, a fiscal surplus and a … Continue reading
Correlating currencies – the EUR and CHF
The EUR/USD and USD/CHF have a nearly perfect inverse correlation, often over 90%. That means that, 90% of the time, when one forex pair rises the other will fall and vice versa. The foundation of the relationship Over a 12-month period, most currencies that trade against the US dollar have a correlation of above 50%. … Continue reading
Use currency correlations in your forex trading
Use currency correlations in your forex trading Correlation is the measure of the relationship between two assets. A correlation of +1 means that their prices move in the same direction, to the same degree, 100% of the time, while a correlation of -1 means that the assets have a perfect inverse relationship and that they … Continue reading
Use government intervention in your forex trading
Valuing currencies The forex market revolves around the value of currencies in relation to the values of other currencies. These values play a large economic role, especially in the prices of imports and exports. Currencies are either valuated by the market, or by governments. In the market, the value of assets is determined by supply … Continue reading
Intervention risk in the forex market
The past few months have been a volatile time for the markets, and forex, usually the most liquid of them all, has been no exception. Considering the US debt ceiling announcement, S&Ps downgrading US debt from AAA to AA+ and the US and Europe’s respective debt crises, this isn’t surprising. However, another element has been … Continue reading
What’s next for the AUD?
Despite having the highest central bank lending rate among industrialised economies at 4.75%, the AUD seems to have run out of momentum, now trading sideways after an impressive rally of record highs against the USD. That being said, the currency is still trading at near its highest level against the greenback in 30 years. Regardless, … Continue reading
Choose the forex pairs worth trading
As most forex providers don’t charge commissions, they make their profits in the bid/offer spread. Simply, the spread is the difference between the buy price and the sell price of a forex pair. Typically, the spreads of the most popularly traded currency pairs are narrower than other pairs, because widely traded pairs are more liquid. … Continue reading
Trading non-farm payrolls
What is the non-farm payroll report? Non-farm payroll (NFP) employment is a statistic representing the total number of paid workers in the US, excluding those in the government, private households, non-profit organisations and farms. The report is released on the first Friday of every month and also includes estimates on the average work week and … Continue reading
Forex price shading
Re-cap – bid/offer spreads Prices on forex currency pairs are quoted as bid/offer spreads, the bid being the sell price and the offer being the buy price. So, if the EUR/USD is quoted at 1.4256/1.4258, a trader wanting to go long (buy) would buy the currency pair at 1.4258, while a trader wanting to go … Continue reading
How your forex provider makes a profit
Forex is often advertised as being a commission free market, with no exchange fees, regulatory fees or data fees. However, forex providers do need to make money somewhere, and this is usually done through bid/offer spreads. The bid/offer spread is how a currency pair is quoted – the bid price is the price at which … Continue reading
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